S&P500: overview in terms of volatility trading

During the last week the US stock market kept declining. The main reasons were the weak macroeconomic statistics and the threat of default (the Republicans still refuse to increase the debt limit). By now the futures of S&P500 have come close to the cluster of support levels – the 200-day MA (1255), the option barrier 1250 and the local low 1241.25 – which may weaken the bearish sentiments. However traders should bear in mind that the forthcoming movement direction will be determined mainly by political and macroeconomic factors, not by technical ones. If S&P500 starts a rally it will encounter resistance around 1300, 1350, 1400(the 50-day MA) and 1373.5 (the high of the year).

 

 

 

Last week the actual volatility of S&P500 was lower than a week before but slightly higher than average. The weekly range reached 37.25pts. Friday, June 10^th, was the most volatile day (21.75pts) while Wednesday, June 8th, showed the lowest level of volatility (11.5pts). The expected volatility of S&P500 didn’t see any major changes – the VIX value fluctuated in the range between 17.26 and 19.16. Taking into account the considerable decline of S&P500 the expected volatility behaved in an unusual way: usually a change of trend (uptrend for downtrend) is attended by a considerable increase in expected volatility (as in March 2011). To some extent it decreased the potential profit form volatility purchases.

 

 

This week’s economic calendar:

 

 

The following news releases will probably increase the volatility of S&P500:

·         Retail Sales (June 14^th)

·         CPI (June 15^th)

·         Unemployment Claims (June 16^th)

Provided by the Department of Options, Masterforex-V Academy

 

 

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Text: Elena Izotova